Leominster Fully Funds Pension Liability
LEOMINSTER -- With Tuesday’s announcement that the city has fully funded its retirement pension liability -- the first in the state to do so -- it will now have at its disposal an additional $6 million annually.
“Today we are making history in the State of Massachusetts. As of now, we are the only city or town that has funded our pension system at 100 percent,” said Mayor Dean Mazzarella in the City Hall auditorium surrounded by city employees, current and former city councilors and former and current members of the Retirement Board.
“What does this mean?” Mazzarella asked the crowd of nearly 100. It means, he said, “instead of shifting all of these millions of dollars (approximately $9 million) that went into this black hole, that becomes available funds for our city. We just have to stay current (paying annually approximately $2.5 million for city retirees).”
The mayor explained that reaching the goal was like paying off every debt a family might ever incur -- mortgages, second mortgages, student loans -- “that’s exactly what it’s like.”
He also stressed that all city taxpayers will no longer have an obligation for the tens of thousands of dollars that nearly every other city or town taxpayer will have to pay in the future as those municipalities struggle to cover its unfunded pension liability.
Mazzarella also referred to the contentious debates that were held between 2012 and 2017 when the Retirement Board voted down cost-of-living adjustments for city retirees.
“When it comes time to give a retired employee an increase in their pension, we don’t have to have these arguments anymore. The system is now currently funded,” he said.
Mazzarella also thanked all the city employees who contributed to the helping the city reach the pension liability goal.
City Comptroller John Richard, when addressing the audience, also referred to the COLA debates over the last several years.
“We may have disagreed on how to get there, (but) we all agreed on how we ended up,” said Richard.
Richard also thanked the mayor for his determination to reach the goal.
“He never kept his eyes off what the goal was. He was steadfast,” said Richard.
Richard, who serves as the ex-officio member of the Retirement Board, thanked the many board members over the years that made the difference in reaching the goal. He pointed out former comptroller John Tata for his 36 years of service, longtime board member Aldo Mazzaferro who served for 52 years, and former elected board members John Picone, Peter Cascio, William “Tex” Thibodeau, Paul Doig, and Mark O’Donnell.
He also thanked current elected members, Bill Perry and Jonathan Campagna, and appointed members Douglas Farwell and city Treasurer David Laplante.
Two analysts with The Pioneer Institute, a Boston-based public policy research organization, offered congratulations for the city’s accomplishment.
“In 2016, the city had been on track to fully fund its pension by 2021, a date well ahead of most public pension plans in the state. The fact that Leominster beat its already impressive goal is really quite staggering. Leominster should let the other cities and towns in on its secret to fund what so many have kicked down the road for future administrations to deal with,” said Mary Connaughton, the Pioneer Institute’s director of government transparency.
Greg Sullivan, a research director for the Institute and a former state inspector general said: “Leominster has set the standard for sound fiscal management by becoming the first municipality in Massachusetts to completely pay off its unfunded pension liability. Maybe we should consider putting the mayor and City Council in charge of every pension system in the state. They deserve credit for having successfully safeguarded the pension system to protect public employees and taxpayers.”
As the celebration of the accomplishment concluded at City Hall, Mazzarella pulled out a document that served as representation of the pension liability.
With Fire Chief Robert Sideleau standing by with an extinguisher, Mazzeralla set the pension liability on fire, to the delight of the audience.